Biden Administration moves to ban chip sales into China

02Sep

Biden Administration moves to ban chip sales into China

 

The Dow Jones Industrial Average and the S&P 500 ended the first day of September on a high note as traders looked forward to the jobs report tomorrow

The Dow cut its losses from earlier in the da jumping nearly 0.5 per cent, in the final minutes of trading. The S&P 500 rallied 0.3 per cent to 3,966.85, after trading lower for most of the day. Both snapped a four-day losing streak.

Meanwhile, the Nasdaq Composite fell about 0.3 per cent, to 11,785.13, to post its first five-day losing streak since February. It still came back from deeper losses earlier in the session.

The moves came as the 2-year US Treasury yield topped 3.5 per cent, the highest level since November 2007. That weighed on rate-sensitive growth stocks, making their future profits less attractive.

Overnight chipmaker Nvidia shares fell 7.7 per cent after the chipmaker said the US government is restricting some sales in China. The company said that US officials told it to stop exporting two top computing chips for artificial intelligence work to China, a move that could cripple Chinese firms' ability to carry out advanced work like image recognition and hamper Nvidia's business in China.

Other companies that make tool or design software have received similar letters in recent weeks informing them that the high-end technologies they export to China have been restricted.

The restrictions are part of a cold war between China and the United States for primacy in advanced technologies.  

To add to this, after years of growing their Chinese operations, US tech firms are starting to relocate production, with the moves small so far. Some of those moves include :

  • Apple moved some production of AirPods to Vietnam in 2020, where it also makes watches and iPads. More iPhone production will be done there as well.
  • Google will shift a portion of its latest Pixel phone manufacturing to Vietnam from China.
  • Microsoft’s Xbox and Amazon’s Fire TV devices, both of which used to be exclusively made in China, now ship from Vietnam and India

Over two decades, the tech industry has built up a low cost and formidable supply chain in China , but there is now a political push to diversify this supply chain. It looks like more and more capital is going to pull manufacturing out of China to find alternatives like Vietnam and India.

Across the sectors, markets were defensive as health care and utilities out performed while the oil price tumbled again on Thursday, as new Covid-19 lockdown measures in China added to worries that high inflation and interest rate hikes are denting fuel demand.Oil fell 3.3 per cent $86.61 per barrel.

Best performing industries included biotech, retail, media and real estate. Worst performers included industrial metals, precious metals, semi conductors and internet services.

Currencies

One Australian dollar has weakened by ½ cent compared to the US dollar yesterday, buying 67.91 US cents (Thu: 68.45 US cents), 58.82 Pence Sterling, 95.19 Yen and 68.27 Euro cents.

Commodities

Iron ore futures are pointing to a 2.9 per cent fall.

Gold prices fell below the key $1,700 level on Thursday for the first time since July, Gold lost $16.90 or almost 1 per cent to US$1709 an ounce.

Silver was down $0.22 or 1.2 per cent to US$17.67 an ounce.

Copper fell $ 11.20 or 3.2 per cent to US$340.65 a pound.

Oil fell $2.94 or 3.3 per cent to US$86.61 a barrel.

Futures

The SPI futures are pointing to a 0.3 per cent gain.

Figures around the globe

Across the Atlantic, European markets closed lower. Paris fell 1.5 per cent, Frankfurt lost 1.6 per cent and London’s FTSE closed 1.9 per cent lower.

Asian markets closed mostly lower. Tokyo’s Nikkei lost 1.5 per cent, Hong Kong’s Hang Seng fell 1.8 and China’s Shanghai Composite closed 0.5 per cent lower.

Yesterday, the Australian sharemarket lost over 2 per cent to 6846.

Ex-dividends

There are 17 companies set to trade without the right to a dividend.

Ampol (ASX:ALD) is paying 120 cents fully franked
Eagers Automotive (ASX:APE) is paying 22 cents fully franked
Big River Industries (ASX:BRI) is paying 10 cents fully franked
Base Resources (ASX:BSE) is paying 3 cents unfranked
Bravura Solution (ASX:BVS) is paying 3.2 cents unfranked
Coles Group (ASX:COL) is paying 30 cents fully franked
Cyclopharm (ASX:CYC) is paying 0.5 cents unfranked
Helloworld Travel (ASX:HLO) is paying 10 cents fully franked
Infomedia (ASX:IFM) is paying 3 cents 14 per cent franked
Kelsian Group (ASX:KLS) is paying 9.5 cents fully franked
Lifestyle Communities (ASX:LIC) is paying 6 cents fully franked
Mineral Resources (ASX:MIN) is paying 100 cents fully franked
Prime Financial (ASX:PFG) is paying 0.6 cents fully franked
Pental (ASX:PTL) is paying 1.7 cents fully franked
SDI (ASX:SDI) is paying 1.75 cents fully franked
Symbio Holdings (ASX:SYM) is paying 4.7 cents fully franked
Terracom (ASX:TER) is paying 10 cents unfranked

Dividends payable

There are five companies set to pay eligible shareholders today.

Hotel Property Investments (ASX:HPI)
Korvest (ASX:KOV)
Microequities Asset Management Group (ASX:MAM)
National Storage REIT (ASX:NSR)
QV Equities (ASX:QVE)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network


Source: Finance News Network

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